Michigan Foreclosure Rate Affected by Local Economy

Most cities and towns in Michigan are feeling the impact of the enduring foreclosure crisis. In fact, the jump in the state's foreclosure rate is now being tied to the local economy. It would seem that the increasing number of homes entering some stage of foreclosure correspond to the increase in unemployment rate. For the month of June, the unemployment rate has reached 8.5 percent. This percentage is considered to be the highest in the country, considering that the national average is at 5.5 percent. Of course, this correlation is not surprising. When a person loses a job, the savings and other extra income goes to the purchase of food and payment of utilities. Mortgage payments are often delayed if not missed entirely. In addition to this, the rising on foreclosure homes in Michigan can also be blamed on relaxed underwriting guidelines and predatory lending practices. Combining all these factors together has resulted to a recipe for a housing market disaster. The local governments are not only worried about the impact of the growing inventory of foreclosure homes in home market values. There is also concern about increasing crime rates and accidents. In order to address this concern, some banks hire professionals to maintain the properties. This includes the cutting of the lawn and shoveling of the sidewalk during the winter months. Of course, the impact on home market values can not be ignored. So called fire sales generally mean unbelievably low asking prices. Foreclosure buyers and investors are often on the lookout for these sales and would not consider buying other real estate properties. As a result, competition in the housing market has become tougher and sellers are forced to drop prices further. Average sale price in neighborhoods such as Lansing has fallen by 23 percent in just one year, from $145,555. Such decline does not bode well for the local housing market. Start your Search for:

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